LGNZ President Sam Broughton wants to beef up transparency measures for councils, to help bring decision-making closer to communities while keeping rates at bay.

“We all want rates to be affordable but we know rates capping is not the solution; outcomes we’ve seen internationally have been disastrous for councils who have taken this route,” says Sam Broughton.

“What councils need is more funding and financing tools in their toolbox, alongside better transparency tools that are proven to provide the accountability communities need - while not compromising on the delivery of essential infrastructure.”

“It’s important that councils remain responsible for determining their rates, so we can make investment decisions that are right for our own local communities. But it’s equally important we have a sharp local government sector that central government wants to partner with,” Sam Broughton said.

Speaking at today’s All of Local Government meeting in Wellington, LGA South Australia highlighted its collaboration with State Government to independently monitor council financial performance, through the development of a Strategic Management Plan Advice Scheme.

This initiative provided a working alternative to rate capping, by enhancing transparency with council finances and giving ratepayers confidence on long-term financial sustainability.

Chief Executive Officer Clinton Jury, of LGA South Australia says there is little evidence to support rate capping as a solution to keeping rates low and improving efficiency.

“The research we have shows the introduction of rate-capping in New South Wales generated severe local infrastructure backlogs, induced local authorities to levy ‘higher user pays charges’ to recover revenue foregone, and restricted councils’ ability to provide quality services,” Clinton Jury said.

“It also clearly showed rate capping did not increase the efficiency of local councils as it removes financial autonomy and the ability to respond to community needs.

“Rate capping is a blunt policy instrument for regulating rate rises – it is detrimental to both councils and the community.

“Rate capping contravenes local democracy which is particularly worrying; unlike other tiers of government, councils make budget decisions in consultation with their communities.

“Placing a cap on how much councils can invest in things like infrastructure projects or services undermines the principles of democracy to govern according to the needs of the community.”

Clinton says that in order to find the right solution for South Australia, it was important to get to the root of the issue.

“We needed to find out why communities were disgruntled with councils and what steps we could take to address this. We worked with the State Government on a wide-ranging review of the local government sector in South Australia.

“The feedback we received gave us clear direction to work with the State Government to resolve issues of highest importance, through means other than rate capping – effectively getting the desired outcome, but without the heavy-handed and constrictive approach of rate capping.

“It was clear ratepayers wanted to see increased transparency on local government spending, alongside legislative reforms to ensure councils can best serve their residents.”

Sam Broughton says while the South Australian model is not a silver bullet, there are elements that could work in the New Zealand context.

“It’s well known that today South Australia has one of the best performing economies in Australia, and it’d be fair to say this is due – at least in part - to sustained investment in local economies by councils.

“We will be working with the Government to shape the benchmarking measures for councils so it gives communities a full picture around performance so communities can make informed decisions,” Sam Broughton said.

About LGNZ: 

LGNZ champions, connects and supports local government. We represent the national interest of councils across New Zealand to deliver more of what matters in their communities. LGNZ is involved in policy, reforms, programmes, and advocacy as well as providing advice, consultancy and training to councils and their staff.

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